Medicaid Managed Care Plan Contractor to Pay $26 Million for False Claims

The U.S. Department of Justice announced on February 1, 2011 that three companies, CareSource, CareSource Management Group Co., and CareSource USA Holding Co., agreed to pay the United States and the State of Ohio $26 million to resolve allegations that they induced Medicaid to pay for assessments and case managements, which were not actually provided to children and adults.  CareSource is based in Dayton, Ohio and provides managed care benefits to Medicaid beneficiaries in Ohio, Indiana, and Michigan.  The allegations against the CareSource entities were that they knowingly failed to provide required screening, assessment, and case management between January 2001 and December 2006 for adults as well as for children with special health care needs.  The Department of Justice alleged that CareSource received millions of dollars in Medicaid funds to which it was not entitled.

This suit was filed under the False Claims Act by two former employees of Care Source, who filed the suit in the Southern District of Ohio when they became aware of Care Source’s practices and sought to rectify the harm caused by the Medicare recipients.  As part of the settlement, both whistleblowers will receive a share of the federal portion of the settlement totaling approximately $3.1 million.

“Cash-strapped Medicaid programs, such as Ohio’s, can ill afford conduct such as this, designed to improve this company’s bottom line at the expense of a program benefiting the poor and disabled,” stated Tony West, Assistant Attorney General for the Civil Division for the U.S. Department of Justice.  Pam Brecht, Esquire, Of Counsel for Pietragallo Gordon Alfano Bosick & Raspanti, LLP, spearheaded the litigation for the whistleblowers and commented “the Federal False Claims Act empowers whistleblowers…to bring private resources to Bayer to put an end to fraud, waste, and abuse in state and federal programs.”

This settlement is part of the U.S. Government’s greater emphasis on combating health care fraud in another significant step for the Health Care Fraud Prevention and Enforcement Action team (“HEAT”).  It was also the result of the coordinated effort by the Commercial Litigation Branch of the Department of Justice’s Civil Division; the U.S. Attorney’s Office for the Southern District of Ohio; the Health Care Fraud Section of the Ohio Attorney General’s Office; and Health and Human Service Office of Inspector General.

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